Many see mandatory mediation as an oxymoron. Mediation is a consensual process agreed to by the parties that provides them with self-empowerment, so any compulsion to attend mediation will destroy that essential consensual character.

Does mandatory mediation encourage participation or simply attendance? Is there any point to mediation unless attendees are active participants?

Mandatory mediation will be ineffective when the parties fail to have decision-makers present and invested in the process. Instead, the parties and their advisers simply go through the motions and the mediation can be a waste of time and money. But that is a reflection of the parties and their advisers – not the process itself.

Mediation can be both compulsory and voluntary. Compulsory because the parties have agreed to participate. Voluntary because it must remain a consensual, collaborative process with the parties responsible for the outcome. These concepts are not incompatible.

Any concerns about forcing parties to mediate was succinctly debunked by Justice Giles in the Supreme Court of New South Wales decision Hooper Bailie Associated Ltd v Natcon Group Ltd:

“Conciliation or mediation is essentially consensual, and the opponents of enforceability contended that it is futile to seek to enforce something which requires the co-operation and consent of the party when co-operation and consent cannot be enforced … The proponents of enforceability contended that this misconceives the objectives of alternative dispute resolution … What is enforced is not co-operation and consent, but participation in a process from which co-operation and consent might come.”

Agreeing to mediate is an agreement to undergo a process, not an agreement to achieve a result. However, if you are going to make proper use of mandatory mediation provisions in a contract then you need to:

1. Have a pre-mediation plan that involves:

  • getting the mediator on board early to assist;
  • identifying key documents that need to be exchanged between the parties;
  • ensuring that the right people are at the mediation from both sides; and
  • preparing properly for the mediation.

2. Be aware of your legal rights but focus on commercial interests and a fair outcome.

Published in New Zealand Law Society’s ‘LawTalk 895’  25 August 2016.

Paul Sills joins Arbitra International

I am delighted to announce that I have joined Arbitra International, a new worldwide management service for arbitrators and neutrals now open for business, with offices in London and Washington DC. Arbitra is [...]